Wednesday, February 18, 2009

ProMOS vs. National Health Insurance

ProMOS vs. National Health Insurance:
How the Government Treats Big Business Differently Than Ordinary Citizen
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
February 18, 2009

Banks have agreed to loan ProMOS Technologies three billion NT. That was a first step in providing relief to the DRAM industry. On the same day, the Department of Health announced its "Health Care Reform Program." It would impose a "National Health Insurance Tax" on over two million people, to compensate for the Bureau of National Health Insurance deficit. These two seemingly unrelated events revealed the vast difference in the government's attitude toward Big Business and the ordinary citizen.

The DRAM industry has suffered hundreds of billions of dollars in losses. For the past few months, everyone including the President, the Premier, and the Minister of Economic Affairs, has promised to rescue the industry, and even promised hundreds of billions in National Development Funds to rebuild the industry. The government's concern for Big Business truly is all-encompassing. By contrast, the government wants to levy a National Health Insurance Tax on ordinary citizens who earn over 180,000 NT by moonlighting. It neither consulted the public before implementing this policy, nor explained its decision. It simply went ahead and did it. It immediately butchered the fatted calf it had selected. The Department of Health even had the chutzpah to refer to their callous move as "Health Care Reform."

Both the DRAM industry and health care involve deficits. But when large private sector businesses lose hundreds of billions, the government immediately offers relief. When the Bureau of National Health Insurance loses 20 billion, the government doesn't consider how to improve the system in order to control costs. Instead, it immediately reaches into the pockets of ordinary citizens to make up the shortfall. It bows and scrapes before Big Business. It looks down its nose at the little guy. Is this how a democratic government is supposed to treat its citizens, according to economic or social class?

Whether the government should ought to relief for ailing industries and whether it is obligated to ensure the solvency of the health care system are different matters. They require different solutions. It is not our intention to conflate the two. What we want to point out is that the government treats Big Business and the little guy very differently. From the perspective of social justice, this is intolerable.

The DRAM industry is important. But many DRAM companies have flatly refused to go along with the Ministry of Economic Affairs industry consolidation plan. The government's intervention has not been welcomed, and has been an exercise in frustration. By contrast, the National Health Insurance was originally supposed to be a health insurance policy. Yet the government has redefined it as social welfare. Everyone receives the same health care. Yet the government has continually raised the rates for users to make up for its own inability to fulfill its committments. Is this reasonable?

Look at some recent examples. Bank deposit interest rates are now close to zero. Yet bank credit card interest rates run as high as 20%. This is sheer exploitation, no different than loan-sharking. Last year, after FSC consultation, most banks grudgingly lowered their rates one or two percentage points. They were clearly going through the motions, and were still exploiting consumers. The banks are arrogant because the government has spoiled them for much too long. When the Special Investigation Unit investigated the Second Financial Reform scandal, it discovered that many banks resorted to bribery. By currying favor with Ah-Bian and Ah-Chen, they hoped to gain an edge over competitors during their acquisition efforts. Unfortunately, prosecutors are frightened of financial consortia. During their interrogations they dared not dig too deep. They merely went through the motions. Do the two examples we have examined, not confirm that the government bows and scrapes before financial consortia, but looks down its nose at ordinary citizens?

Taiwan's DRAM industry, is a monster created by the Chen administration, the product of "Two Trillion, Twin Stars" and anabolic steroids. Too many companies crowd the field, too much capital has been invested, and the technology is too heterogeneous. These companies are saddled with 400 billion in loans. They cannot produce efficiently, are underutilized, and lose money. The government can sink billions into them. They can help them squeak by, for now. But if they do not undergo radical restructuring, they will still be unable to compete with South Korea.

The best thing the government can do is to allow the market to eliminate the unfit. Natural selection will leave the strong standing, allowing them become the backbone of the industry. This way, Taiwan's DRAM industry will not collapse or disappear. It will fortify itself from within. Germany's Qimonda has declared bankruptcy, temporarily reducing pressure on the global DRAM industry. This is a good example of market selection. But if our government intervenes, if officials shoot off their mouths, not only will they provoke market speculation, they will throw a monkeywrench into any restructuring plans the industry already has in the pipeline. ProMOS Technologies has been saved, for the time being. But the entire industry is in a wait-and-see mode. The downside is great. The upside is non-existent.

The National Health Insurance system faces the same problem. If the government is sincere, the least it can do is offer a public accounting of the National Health Insurance system's finances. It should brief the people on where the money went. How much money did the National Health Insurance Bureau save through aggressive cost-cutting measures? What is needed to make up the deficit? If it can persuade the public, everyone is sure to do his best to ensure that the health care system does not fail. National Health Insurance Bureau workers received year-end bonuses equalling four months wages. Yet the Department of Health has, out of the blue, decided to wring "Health Insurance Taxes" from two million citizens. The system was clearly meant to be a form of insurance. Yet the government is redefining it as a form of taxation. How can this be justified?

2009.02.18 03:45 am










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